This week we look at the largest initial public offering of shares in the United Arab Emirates since the global financial crisis.
Emaar Malls Group’s share price jumped by 12% on its first day of trading thanks to huge demand from Arab and Western investors.
The Mall of the world an immense project – with state backing “Dubai Holding” – focuses attention on the strength of the recovery after the financial crisis in 2009 but also raises the question - could history repeat itself?
The United Arab Emirates’ biggest listed developer, Emaar Properties, opened its retail division ‘Emmar Malls’ to share trading, and enjoyed a first day gain of 12%.
The Mall of the World, which will cover an area of 48 million square feet. The estimated cost is 6.8 billion dollars “- 5.4 billion euros”.
Work started in July on the mall, one of largest construction projects in the world.
It will effectively be a climate-controlled city within a city in Dubai, and will be even bigger than Emaar’s Dubai Mall, the most visited shopping complex on the planet.
It was the largest IPO of its kind in the Emirates since the global financial crisis severely impacted the region in 2009, and raised 1.6 billion dollars — one and a quarter billion Euros.
This project is an indicator of the resurgence in investors‘ confidence within the business and financial sectors as Dubai’s economy experiences a strong comeback.
Analysts point out the ‘Emmar Malls‘ IPO helps renew a competitive atmosphere in the construction industry at exactly the time it’s needed.
Craig Plumb, Head of Research at Jones Lang LaSalle (JLL) in MENA: “I think we’ve gone through a period where the market has been growing unsustainably quickly and now we’re moving into a period where it’s starting to stabilise. And that’s a good thing for the overall market. So you’ve got confidence from investors, you’ve certainly got more confidence from developers”.
There are indications that the project “the mall of the world “ could help create demand among investors in Europe, the United States and Asia.
To shed more light on all of this, we spoke to Nour Eldeen Al-Hammoury, Chief Market Strategist at ADS Securities
Daleen Hassan, euronews: So we’ve seen an optimistic atmosphere surrounding the Emaar Malls IPO, what does this mean for the UAE’s economy ?
Nour Eldeen Al-Hammoury: “As you mentioned in your story, the confidence is back and this is the key not only for the UAE it is for the region. The economy is expanding within a moderate and encouraging rate. Businesses are also expanding ahead of the major event on the longer term which is the 2020 Expo. As far as the confidence remains, more and more business opportunities will be open and Emaar Malls IPO and the significant demand is just one of the may evidences.
Daleen Hassan, euronews: Some analysts have warned that Dubai risks repeating the same mistake of racing ahead with too much construction, which was one of the factors behind the debt crisis in 2009. Is there a danger of that?
Nour Eldeen Al-Hammoury: “So far there are no internal risks. Dubai is expanding moderately with studied steps and of course they have learned from the past. However, the risk is external as always. The slowdown in Europe and Asia in addition to the uncertainty of the US economy should keep the eyes open of these risks.
Daleen Hassan, euronews: And with the continued political tensions in the Middle East, how do you evaluate the stability of the Gulf stock markets compared to other markets in Europe and the US?
Nour Eldeen Al-Hammoury: “Well starting from Dubai, in the Summer there was a notable sell off due to the geopolitical tensions and the situation in Arabtech, however, the market recovered more than 90% of these losses. If you looked at Europe, Asia and the US, these markets are suffering lately, which could be the short term correction that everyone is waiting for. The ECB decision last week shows that the situation in Europe is even worse than the ECB thought while the slowing down in Asia is also worrying, therefore the region will always be a potential for new opportunities.
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